I just got a whatsapp msg from a property agent which I would like to verify if its true. It says that from 1/1/2015 onwards, banks no longer offer minus interest rate of BLR, there will be BLR + 0% or higher. Last day submission on loan to entitle for minus on interest rate will be set at 19/12/2014.

Can someone verify if this is true?

OMG! u belif a "property agent"???

This post has been edited by jeremy05: Dec 5 2014, 11:03 AM

Check with your banks, not with the agent.

That would be Base Rate he is mentioning. Try google, don't panic.

Show him the middle finger!

better call your trusty bank ...

Property market is bad nowadays. Agents have to make a living too. Cant blame them.

It is no longer called BLR then. That is Base Rate.

just a word from property agent, not the bank or bank negara. ask him from where he heard? no news at all regarding this matter

It's not true. What is going to happen next year effective 2/1/2015 is there will be Base Rate introduced to replace BLR. No such thing as BLR+0% to be implemented.

maybe the agent heard half and didnt heard the other half..

he heard BLR will be no more .. =>so he assume BLR=0%
he did not heard BLR will be replaced with Base Rate.

This agent phailed ... O_o

agent just want you to quickly bbb by the year end. same trick done by car dealers, must buy now, next month interest increase! lol

let them rot only... after GST only buy if agents /bankers come wave ur middle finger t them

as I know, next year NPL (non performing loans ) will surged, dunno bank negara will give instruction to hold legal action to 6 months from default or not... lets guess

OPR is rumoured to increased 25 points Jna 2015

economy downturn, they are not going to increare the OPR. If situation worse, they might even consider to reduce it instead.

guess depends on the inflation level, Malaysian are all noti taking opportunity, need to contain inflation

BBW, normally central bank will hike the interest rate when the inflation is caused by demand pull. But the current inflationary pressure is cost push in nature.

The thread is temporarily pinned so that people understand what it is about (BR)

I have seen too many uninformed person spreading false rumour across.

https://forum.lowyat.net/topic/3432094
https://forum.lowyat.net/topic/3432076

BR /= BLR

Not much different between BLR (Base Lending Rate) which are using right now compared to BR (Base Rate) which going to implement soon. For BLR, the spread by the bank can be either + or - ; For BR, the spread will be only +. BR is implement to provide transparency (to consumer) of costs & profit imposing by the bank with the spread (+) they offered as previously the spread (+ or -) is quite confusing to consumer which do not have financial knowledge.

Despite BLR going to be replaced by BR. The effective rate for BLR & BR will be the same.

Assume BR @ 3.6% & BLR remained 6.85%.

Scenario 1:
BLR 6.85% - Spread 2.4% = Effective Rate 4.45%
BR 3.6% + Spread 0.85% = Effective Rate 4.45%

Scenario 2:
BLR 6.85% + Spread 0% = Effective Rate 6.85%
BR 3.6% + Spread 3.25% = Effective Rate 6.85%

Existing Loan with BLR will be remain based on BLR. Only new loan will start using BR. I dun think bank will set the effective rate differently for both BLR & BR. Else, all existing customer (using BLR) will refinance within the bank or to others bank. Just my opinion.

Rumor that RPGT gonna be abolished Jan 2015 and LTV 100% allowed for 4th home and above starting April 2015 lol

Thanks for the information. Your illustrations is so clear.

No way its gonna be BLR + onwards. By doing so the number of defaulters will shoot exponentially higher causing instability on the money flow and further plunge deficits. I would not simply believe those messages without doing DD.

Its like believing an article on the internet saying that drinking piss is good for you.

I think thats a good explanation.
Was just talking with some management level staff with a local bank and early indications are at current rates, BNM will not let banks price the BR plus higher than the current BLR minus.
IINM instead of BNM setting the BLR based on OPR, BR will be based on market 3m KLIBOR rates but all the nitty gritty details are still being finalised.

I think currently people are only expecting a slight OPR hike in 2H2015 (if any) as forecasted inflation in 2015 will be mainly driven by cost push rather than demand pull.

Yes, most banks will use 3M KLIBOR as their reference for their BR setting. Though OPR is not used, KLIBOR normally moves prior to the OPR change as the market would have priced in earlier before BNM makes decision on the OPR.

The current expectation is that the effective rate after the BR implemented starting from 2/1/15 will not deviate much from the current BLR-based pricing.

May I know what is the BLR rate for Soho title under commercial unit? Recently got a loan approved from RHB that is BLR minus 2.15% .. Is that okay?

so BNM or bank will maintain 2 systems for existing and new customer?
Say,When OPR increase 25 points
BLR and BR will increase to the same?
E.G, BLR = From 6.8% to 7.05%?
BR = From 3.8% to 4.05% ?

kinda confuse how they manage..

P/S: All based on assumptions...

Yes, BLR and BR will co-exist as the existing consumer loan will still be priced using BLR, unless the borrower requests for a change to BR. However those existing credit facility which is revolving in nature, eg OD will in next review be changed from BLR to BR.

is BR and FD same ? or this there any different?
My previous loan is FD+

Seem the calculation is same..

BR=/FD. BR is used by bank to price the loan. FD rate is how much the bank is willing to give you as depositor for the money you "lend" to them to lend out to borrowers.

May I know which bank offer you loan with loan interest of FD rate + spread?

EON lo.. before change to HLB.. i have ask my banker that my loan still under this type..

how much is BR now?

i dont think that this would happen..

Because the intention of the government is to curb property speculation..

Haha bro, don't take it serious. I think this was his sarcastic reply to someone.

quick question:
why i saw so many forumers keep spreading info that people will desperately sell off their asset next year? anything to do with inflation or this BLR/BR?

Most likely the GST. As for the changes from BLR to BR, no one really knows the rate yet, most likely it will be similar to what we are getting now anyway.

does it nothing to do with inflation or economy coming down?

Well.. when GST in implemented, surely there will be inflation!

However, the economy going down or not, I cannot speculate. It may seem like the case and people would like to hedge their investments by buying gold and other precious metals, or bond unit trusts funds. When the rental market is down, you may find it difficult to hold onto your properties too. So they may think it would be better to let it go and wait until the storm passes.

why would this can happen?
isn't one of way for living?
its not like the tenant can move or buy their own house in a short time rite?

Rental for commercial properties can go down during an economic recession. If there are mass layoffs, the residential rental market can be affected too. If they have no jobs, how can they pay? As some move back to their hometown, there will be less prospects to rent out to, or some will delay the payments. Im not saying it will happen, but it can happen. I dont like to speculate on the economies, but if it is true that people are dumping their assets to hedge on other assets.. then maybe it's important to take note.

Anyway, we are way off topic here...

This post has been edited by wild_card_my: Dec 17 2014, 12:46 PM

Just met UOB agent , and been inform 2/1/2015 all bank will change BLR rate -> BR rate
and he do counted already .
for a property RM500k loan equally you need to bear more RM140++ if BLR -> BR .

so , i would say xxxx up already now

This post has been edited by Hunakadoo: Dec 30 2014, 04:20 PM

Thanks for sharing. No news form my side of banks yet.


But I dont quite get what you said, it means for the same loan amount you need to pay RM140/month more when we start using BR? That's... not very nice :|

i myself are not banker , so i concern only the final amount i pay ,

this UOB bank agent he do calculation for me , upon a RM500k loan amount . and monthly will be around RM2320/month for now .
so after BR implement , it could be around RM2460/month

for those who sign SnP before BR implement , they'll still follow BLR while not BR .

so for new buyer on 2015 , you're ready to xxx up now . sigh , GST + BR

Noted, thanks for sharing. That is quite significant. So the effective interest rates have gone up for that particular bank.

I will post whatever i have whenever I have somehting.

Yes, effective 2/1/2015, Base Rate will replace Base Lending Rate for all new consumer loan. Those existing BLR-based loan will remain as it is. However, those BLR-based credit facilities which are revolving in nature shall be priced using BR when it comes to next renewal date.

It's not so correct to say that upon implementation of BR, the loan monthly instalment will increase compared to the same loan but being priced using BLR.

The pricing mechanism will be BR + spread whereby the component of the spread comprises the liquidity risk premium, credit risk premium, operating cost and profit margin. It's determined by how cost efficient is the bank's operations, how costly is its funding and how much the bank wants to profit from the loan, among others.

This post has been edited by Jasoncat: Dec 30 2014, 10:17 PM

It will ended up being the same. Might be different by 0.5- 1%.

Things to look got Effective profit rate.


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Heard Going fwd, no more BLR, all loans rate subject to individual bank's base rate. What's the difference and impact?




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maybank will lost a lot of money compare to now.

As some of us predicted, the effective rate is similar to what we are getting now.

Asgaard, what is the source for all these numbers ya? BNM?

edit: how to summon?

This post has been edited by wild_card_my: Dec 31 2014, 10:35 AM

You dont know that. Do you know what their effective rates they are offering?

Also, the BR is the average borrowing cost for the banks... if anything, isn't Maybank's borrowing cost very low? Which is good for them.

If Maybank BR is 3.20%, is that mean their rate will be 3.20% + 1% = 4.2% ? ...

Wait, have they announced that their rates will be BR + 1%? where did you get this? Their spread should be independent from other banks, just like how it is now.

This post has been edited by wild_card_my: Dec 31 2014, 10:13 AM

wild_card_my summoning no jutsu!



But even if BR+Spread% is the same as BLR-x%, isn't that BR changes more frequently / often than BLR? Correct me if I understood it wrongly..

This post has been edited by polarzbearz: Dec 31 2014, 10:22 AM

1% just the my assumption ... but the concept is like that right ? BR + %, the % is base on the bank n individual right ?

Thanks for the tip

They say that the BR can change every 3 months.

Overnight-policy-rate (OPR) is set by the BNM, which is the interest rates charged by the BNM for the loans that they extend to the commercial banks. In turn, the banks would loan out the money to the public in the form of mortgage/pl/hl/asbloan/etc. based on the BLR. As such, when OPR changes, BLR changes too. But BLR has the "advantage(??)" of relying on a single metric which is the OPR as the basis to set its own interest rates. And since OPR doesn't change that ofter, BLR stays the same way too.

BR on the other hand, is the average borrowing cost for the banks, and these are based on a matrix of loans available to the banks. Different banks would have different abilities/capacity to borrow, as well as interest rates charged to them. As such, chances are the BR will be more... what's the word... variable (?)... have higher entropy (??) than BLR since BR is based on the average borrowing costs which changes on a daily basis for the bank. Remember, banks borrow from each other too, and from their depositors too, and these things have costs associated to them in the form of payable interests.

As such, BR is similar to KLIBOR but not exactly the same. I expect the BR would change (up/down) every quarter as they are allowed to.

This post has been edited by wild_card_my: Dec 31 2014, 10:38 AM

Yes, as such, maybank may have lower BR, but their effective interest rates may be similar to other banks anyway due to the differences of each spread given to the client

To be honest, I dont know myself what it is going to be, but I expect nothing will change much except the old loans would be based on the BLR, while the newer ones will be based on BR. EIR would be similar

This post has been edited by wild_card_my: Dec 31 2014, 10:42 AM

You 're right, in the end, BLR n BR just the same, not sure why BNM says it's more transparent, easier to compare between bank to bank.

Anyone can advise me if BLR + 2.45% better or going for BR ?

BLR + 2.45% is horrible...

Go for BR.

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Sorry, it should be BLR - 2.45%

Yes, BLR - 2.45% is actually quite good. That gives you about 4.4% Effective interest rate, which is what you will probably get with BR rates, as reported in some posts above.

they only changed the mechanism...the final rate will be the same

maybe BNM want this,

when ppl see rate - x% => wah so nice!? BBB!

when ppl see rate + % => think think first... tell u later.

Thanks for your advice.
In other words, no need to worry, right?

But at the end, would it put consumers in a disadvantaged position? Since its bases on BR + Spread.
Let's take two examples, Maybank and RHB Bank.
Based on screen shot recently released, Maybank has BR=3.2 and RHB has BR=4.0. Say if Maybank charges spread of 1.2 = effective rate 4.4; whereby RHB charges spread of 0.4 = effective rate 4.4.

On paper both have the same effective rates, however, let's say on next quarter, Maybank's BR is increased to 4.0 due to certain circumstances, and RHB's also increased to 4.1. Wouldn't this put Maybank borrowers in a disadvantaged position, having to pay effective rate of 5.2 now as compared to 4.5 from RHB? since the spread is now tied to BR.

Correct me if I understood it wrongly.

Ill be honest that I too, am not too clear about this. But given the nature of BR being more "transparent" and probably would change more in a shorter time compared to BLR, the customers stands to "lose" in the form of uncertain and constantly changing interest rates. BLR can actually be individually set by each bank differently, only that most banks decided that they would set it at the same levels of 6.85% but there were some banks who set it a little high (but with better spread)

I doubt that the changes in BR would change so drastically from one quarter to another. But in the end of the day... customers will now have to be keep track of each bank's BR for each loan that they have (unless they keep on signing with the same banks) while they used to only have to keep up with one single BLR. Very inconvenient, but Zeti must have her reasons.

This post has been edited by wild_card_my: Dec 31 2014, 11:48 AM

Maybe, maybe not. OCBC's effective interest rates for their reported BR so far is much higher than BLR. But that number i got isnt official. Also, BR is expected to change more often than the BLR, since BR is based on the average borrowing costs for each bank which changes often, while the BLR is based on the OPR set by the BNM that has not been changing too ofter (last change was in June, before that it was quite a few years apart)

Effective interest rates is all that matter. If they are similar, and you need to buy a house.. i dont think it matters.

If I were you, I would take the BLR. it hasn't changed too much over the years, while the BR is "expected" to change on a quarterly cycle. This would throw a havoc on your personal financial management.

But according to BNM, after BR introduced, BLR will change as frequent as BR too.

QUOTE

BLR-based loans prior to 2015 will continue to be referenced against the BLR. However, when a financial institution makes any adjustments to the Base Rate, a corresponding adjustment to the BLR will also be made.

This post has been edited by stormaker: Dec 31 2014, 11:58 AM

depends on Loan Agreement from bank , usually bank will protect themselve with ** subjective to bank change ** etc terms & conditions . hahaha
end up we,as a end user we'll have to suffer for the cost

Sorry,u have the source from BNM confirming your statement?just want reassurance

Source

before BLR -x%
now BR +x%

imho,
nothing to shout about

if i look at my current loan interest rate. It is 4.35%
Then I look at the submitted rate, it is obvious all banks are higher.

Means with this BR, it is higher cost for consumers!

The banks are required to submit to BNM their proposed BR and the effective lending rate (ie BR+spread) by 26/12. The effective lending rate is based on the scenario of RM350k loan for 30 years without lock-in period for the best profile customer. BNM has then sent to the banks the list of FI, Islamic FI and Development FI with their proposed BR and effective lending rate.

Does anyone have the list?

How the BR is set is based on 2 primary factors, ie the FI benchmark cost of funds and the SRR. Most banks have used 3M KLIBOR as the benchmark COF, so that's why most of the BRs are around 4%.

KLIBOR moves (in advance) when the market expects BNM will revise the OPR in the coming MPC meeting. So, OPR changes do impact BR too (if the BR setting use KLIBOR as the benchmark COF). I reasonably believe that OPR change will trigger the BR change too even if KLIBOR is not taken as the benchmark in BR setting.

As for the frequency of revision in BR, it may not necessary on quarterly basis. BNM requires the FIs to put in place the policy to determine under what circumstances will trigger a revision in BR.

Bro, I believe your loan is much higher than RM350k (the loan amount that is used as the basis for determining the effective lending rate for illustrative purpose). As such, the all-in pricing could be more attractive and near to your current BLR-based rate.

Yes it is.
Hmm. I think it is still too early to confirm if it is indeed better or worst.
But what I would do is I would go to the bank next week and pretend stupid and try to apply for a loan of similar amount and see what's the rate I would get...

Out of topic question,

If I sell my residential property after GST is implemented, will I kena GST tax?
Thanks.

No kena

This post has been edited by propusers: Dec 31 2014, 03:23 PM

Residential property is exempted from GST.

Also, GST is the buyer pay one, not seller.

Correct me if I'm wrong. BLR is set by BNM, banks play around with (minus) spread.

But if BR and (plus) spread are up for the bank to decide? Both of it?

BLR was originally set by BNM but banks were later given the rights to decide on their own. BR is also up to the banks to decide.

My assumptions since BNM says it is more transparency for all other banks. Correct me if im wrong.

The BR for all bank is different becuz the 'cost' is different for each bank to do their biz under BNM.
So u probably can get the lowest interest rate for your loan with the bank of lowest BR. Which means ppl will tend to look for bank with lowest BR.

It increase the competition between each bank.

The more transparent just mean you no longer need to window shopping and inquire how much negative spread each bank is given. It all shown in the BR rate. Before BR you only know BLR is 6.6% but the minus spread is upon negotiation with the respective bank, so you won't know the minimum "base" rate you are going to get, since BLR only change in longer interval compared to bank changing their minus spread. Hence when you negotiate with banks, you won't know how much negative spread is determined by market force, and how much is due to your own credit risk. It will be able to "see" after base rate introduce and what you negotiate with banks is purely your own credit risk, and thus greater transparency. The banks can't tell you: oh, the negative spread offered is different because its how the market is, not your credit issue.

On the same note, should one buy a residential property after GST implemented, need to pay tax or exempted.

I think there is still a need to shop around after implementation of BR. A low BR doesn't really mean in reality the bank has low cost of fund as that's likely due to differennce in selection of benchmark cost of fund. Negotiation with the bankers on the loan spread is still necessary in order to get the best rate for yourself.
Ideally, under risk-informed pricing, borrower with high credit risk is supposed to be charged with higher interest. However, under competitive environment, I believe that ultimately the rate offered by the banks will be pretty much close.

Residential are exempted from GST, however, some of the materials used during the constructions may be charged GST by the supplier, so there might be chances where developer increases final selling price to adjust to the extra cost incurred.

Here's an article which illustrates the differences: http://loanstreet.com.my/learning-centre/H...Property-Market

Hi all, just got news that the property bank rates is determined by the bank itself and therefore it have a very different rate for each bank. + how much would very much be depend on your credibility.

On another issue I heard from my father in law that last time he purchased a house and I think at the rate of blr-2.2 I think. But after a few years the bank changed the rate to blr -1 or something like that. According to him it was stated in the bank agreement that the bank reserve the rights to change as and when they see fit. I Am not sure if anyone come across this. But banks are usually blood sucker and I would think they would want to benefit from the this new ruling (by adding some interest to it).

I attended a talk from some gst expert. What they said was just surface infor correct me if I am wrong. He mentioned that GST would depend very much if you are a registrant or not. If you are not a registrant the other person don't need to pay tax. But if A registrant deals with another registrant then it would be subjected to GST on the property pricing. It doesn't matter if it is a commercial or residential.

Yup, you are right. If both are not registrants, they indeed cannot charge GST as they are not eligible to collect taxes.

However, if one is registrant, he have to charge GST to the next-level, regardless if the next-level is a registrant or not (except for zero-rated goods or exempted supplies).

If one is not registrant, he is not entitled to claim input tax charged by his supplier (if the supplier is GST registrant and charges him GST). Note that my example belows are the cost of construction or materials, not the final property itself. The final property cannot be charged with GST (exempted supplies)

However, in residential case, I believe there will be no differences because even if the developer or sub-con is a GST registrant, he will be charged Input Tax (tax charged on him when he purchases raw construction materials / services); but he cannot charge the Tax on the next-consumer (i.e. buyers), as Residential property is exempted from GST.

Here's an illustrated explanation I described above (in the picture, it's in a scenario of Hospital):



So as the developer / sub-con cannot claim the input tax incurred, they may have to indirectly increase the service cost in order to "offset" the "additional costs" incurred in doing his business; because he cannot pass the GST to the final consumer (us)

This post has been edited by polarzbearz: Jan 1 2015, 10:55 PM

Will bank loan subject to GST?

Not that I am aware of, I might be wrong though. Not from banking sector

summoning wild_card_my sifu to answer this

Bank loan is not subjected to GST but bank loan processing and other services such as MEPS provided by bank is subject GST.

Thanks.
But It will b one time pay or each n every bank loan draw down processing subject to GST?